Clinton visit: US wants oil-thirsty India away from Iran

US secretary of state Hillary Clinton waves upon her arrival at the Netaji Subhash Chandra Bose International Airport in Kolkata. AFP/Dibyangshu Sarkar

Urging India to reduce the oil it imports from Iran tops US secretary of state Hillary Rodham Clinton's agenda as she starts two days of talks with Indian officials.

India has huge energy needs to fuel its rapid growth but has made some progress in easing its dependence on Iranian oil. A senior official traveling with Clinton in Asia said the United States wants to see more.

The official, who spoke on condition of anonymity to preview Clinton's private discussions in Kolkata and New Delhi, said the "trend lines are good" but "we really need to receive assurances that they are going to continue to make good progress."

The official said India had recently stepped up imports of oil from Saudi Arabia to make up for the reduction in Iranian oil and that the US was eager to see the Indians explore other alternatives.

India and Iran reached a deal earlier this year that would allow India to pay for about 45 percent its Iranian oil purchases in rupees. Iran would then use the Indian currency to buy goods from India.

International economic sanctions on Iran had made oil trade difficult, because Indian oil importers had to scramble to find banks willing to handle transactions with Tehran.

The barter exchange would help India pay for the Iranian crude without resorting to dollar payments, thus bypassing international banks.

An Indian delegation visited Iran in March to promote Indian goods including machinery, iron, steel, minerals and automobiles.

Clinton's visit coincides with that of a large Iranian group that will be in New Delhi to explore Indian goods and services Tehran can buy to offset the enormous rupee payments running into billions of dollars that Iran has accumulated.

India has been pushing its oil companies to cut back their crude imports from Iran in order to be among the next set of countries to be granted a sanctions waiver that Washington is expected to announce in June.

Like other major consumers of Iranian oil, India could face US sanctions by the end of June if the Obama administration determines it has not made significant cuts in imports under a law aimed at squeezing Iran's petroleum industry to press the country to comply with international demands over its nuclear program.

A dozen European nations and Japan have already been spared from those sanctions after the administration determined they had substantially reduced their Iranian oil imports. India, along with China, South Korea, Turkey and South Africa have still not received such waivers.

The US special envoy for global energy issues, Carlos Pasqual, will visit India later in May to follow up on Clinton's talks, the official said.

Because of its energy needs, India has bristled at US calls to seek alternatives to cheap Iranian oil. The official said the Indian parliament is especially resistant to comply with demands from Washington on Iran.

After visiting Kolkata, India's major eastern city, Clinton will travel on Monday to New Delhi.

The US official downplayed the presence of the Iranian delegation, which he said was centered on consumer goods.

"I don't think we are too concerned about it," he said.

In her talks with Indian officials, Clinton will also be pressing for the country to continue economic reforms and trade liberalization, including dropping restrictions on foreign investment in the finance sector and allowing large western retailers to open up, the official said.